The Adverse Effects of Short‐term Contracts on Young Workers: Evidence From Italy

Short‐term employment contracts have been deployed rapidly across European countries in the past decades. In this paper we suitably modify a known search and matching theoretical framework to quantify the effects of temporary contracts reforms on the present discounted value of the utility of junior...

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Bibliographic Details
Published in:The Manchester school 2019-12, Vol.87 (6), p.751-793
Main Author: Tealdi, Cristina
Format: Article
Language:English
Subjects:
Employment contracts
Flexibility
Labor market
Present value
Productivity
Side effects
Temporary employment
Workers
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Summary:Short‐term employment contracts have been deployed rapidly across European countries in the past decades. In this paper we suitably modify a known search and matching theoretical framework to quantify the effects of temporary contracts reforms on the present discounted value of the utility of junior and senior workers. We calibrate the model using data from Italy and find that while senior workers may benefit or not from the diffusion of temporary contracts depending on the productivity of the match, the utility of junior workers is always lower in the presence of temporary employment. This result is ascribable to the high rates of turnover associated with temporary contracts which offset the benefits of the increased labour market flexibility.
ISSN:1463-6786
1467-9957
DOI:10.1111/manc.12265